FxWirePro- Gold Dailty Outlook 
Interest rates: Monetary policy is always political as central banks opt to back the financial sector 
Inflation: I've been analysing the Bank of England's forecast over the past two years – here's how they got it wrong 
FxWirePro- Gold Daily Outlook 
As treasurer, Bill Hayden set Labor on the path to economic rationalism 
Think the RBA will lift rates on Melbourne Cup day? Don't bet your house on it 
Governments have been able to overrule the Reserve Bank for 80 years. Why stop now? 
If central banks don't start cutting them soon, it could actually increase inflation 
MXN realized vol is at historically low levels, resulting in eye catching MXN and x-MXN implied – realized vol spreads within the EM space (4.5vol and 3.8vol for EURMXN and USDMXN, respectively). Despite the hefty risk premium (refer 1st chart), with the implieds at multiyear low we prefer cautious constructs that monetizes vol smiles premium instead of outright vol shorts. 2m realized spot- vol correlation plunged as August rolled off from the 2m trailing window while 25 delta OTM MXN puts / ATM remain 1-sigma extended (1-year z-score basis).
Further expected policy easing by Mexico’s central bank and limited regional data will probably have the overall region more influenced by spillover effects from global developments over the coming week.
Banxico is expected to cut its overnight rate by another 25bps on Thursday.
It is analysed that earning theta without taking left tail risk via high beta ratio call spreads. Such structures are covered to a fair extent against spikes of high beta volatility given the long risk-reversal sensitivity embedded in the structure. Considering the current MXN skew setup and the receding risks for MXN spot we are open to taking the gamma risk in order to more efficiently reap the extra OTM vs ATM premium on MXN put side. 1*1.5 MXN ratio put vol spreads have shown strong and almost equivalent systematic returns for USDMXN and EURMXN over last few years (refer 2nd chart).
Consider: 3M EURMXN ATM/25D 1*1.5 vol ratio call spread @9.45ch vs 10.5/10.75 indicative.
3M USDMXN ATM/25D 1*1.5 vol ratio call spread @9.4ch vs 10.45/10.65 indicative. Courtesy: JPM
